Farm advocate testifies on importance of USDA financing

North Carolina farm advocate and Executive Director of the Rural Advancement Foundation International (RAFI) Scott Marlow delivered testimony before the House Subcommittee on Commodity Exchanges, Energy, and Credit. The subcommittee hearing on U.S. Department of Agriculture (USDA) farm credit programs is part of a larger series of hearings entitled, “The Next Farm Bill”, hosted by the Committee on Agriculture of the U.S. House of Representatives.

RAFI is a member organization of the National Sustainable Agriculture Coalition (NSAC), and its staff has worked with farmers in crisis since the 1980s to help keep farms in business and family farmers in their homes. Through his work with RAFI, Scott provides in-depth financial counseling to farmers in crisis, education on disaster assistance programs and access to credit, and helps mid-scale farmers increase the sustainability of their farms by helping them to transition to higher-value specialty markets.

“It has become clear that for America’s mid-scale farm operations to thrive, they need to access markets and products that allow them to increase their return on investment,” said Scott. “The best way they can do that is by bringing more of the food dollar back to the farm, and by connecting to consumers in new ways like through local and regional food markets or by engaging in value-added production. To us this is a core strategy for addressing farm survival, especially in these times of low commodity prices.”

In his testimony, Scott underscored the importance of USDA Farm Service Agency (FSA) loan programs, which help farmers who aren’t well served by private lenders to cover necessary operating and ownership costs.

“Our calls are up,” said Scott, “especially from commodity farmers who have been turned down for their operating loans. The severity and sense of frustration of those calls have increased.”

Scott stressed that three things must be in place for these FSA programs to be as effective and efficient as possible: 1) There must be sufficient funding in the programs to meet the current and projected demand, 2) There must be enough FSA staff to administer these programs at the county level, and 3) FSA staff must be properly trained so that they can administer the programs well.

“A farm does not wait on politics,” said Scott in his testimony. “The seed does not wait, and the weeds and the bugs do not wait. When a loan is delayed, the family… is forced to find funding through alternate means like high-interest credit cards that will only exacerbate their financial situation.”

He also cautioned the Subcommittee against giving into pressure to increase FSA loan limits across the board. Instead, Scott suggested that any changes to loan limits be measured against current program usage and demand, historical funding levels, and performance targets with respect to lending to beginning farmers and other underserved customers.

“If loan caps are increased across the board in the next farm bill in order to accommodate the needs of the largest farms,” said Scott, “family scale farms, including beginning and socially disadvantaged farmers, will face fiercer competition for a limited pool of federal loan funding. Those borrowers deserve to be the focus of your concern.”

Scott also stressed the importance of USDA conservation, risk management, and value-added grant funding to the Subcommittee. These programs help farmers to increase farm income, especially during these times of low commodity prices, and are critical to bringing the next generation back to the land.

“The only way that we as a nation are going to move the needle on beginning farmers, land transition, and farm viability is to find a way to add more value to the farm,” said Scott. “In order to do that, aspiring farm entrepreneurs must have access to credit programs that encourage, rather than discourage, value-added agriculture, diversification, entrepreneurship, and innovation.”

Scott’s full testimony, along with an archive of the hearing, can be found on the Subcommittee website.